Central Bank Independence: Monetary Policies in Selected Jurisdictions (II) - The Dynamics of Central Bank Independence in a Developing Economy

Abstract

Through an investigation of selected jurisdictions, this paper aims to contribute to the extant literature in investigating the relationship between central bank independence and price stability, as well as how such a relationship varies between different jurisdictions – even though it is widely argued that political and legislative interference is often contributory to price instability.

This paper employs times series data to study the dynamics of central bank independence. It also employs bivariate cointegration methodology to examine the long-term relationship between inflation index and the different measures of financial development.

Keywords: inflation, price stability, central bank independence, monetary policy, financial stability